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Mish is right (ouch, hurts to say that).


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2015 Mar 16, 9:30am   4,667 views  16 comments

by Blurtman   ➕follow (2)   💰tip   ignore  

"Nearly Every Mainstream Economic Theory Wrong

I started to write nearly every mainstream economic theory is suspect. I changed the subtitle to wrong because there is not a single mainstream theory that takes into consideration asset bubbles instead of a fatally flawed CPI as a measure of inflation.

Add to that, misinterpretation of GDP and unemployment, and it's no wonder that many theories behave so badly in practice.

Economists cling to fatally flawed ideas. Garbage in - Garbage Out is the general rule of thumb."

http://globaleconomicanalysis.blogspot.com/2015/03/wage-growth-vs-economic-theory.html

This certainly matches my experience. I got an MBA from UC Berkeley, and took a few econ classes, and was wondering how it could be that what was being taught at this prestigious institute of higher learning was considered to be correct. Any rational being could have determined that the dogma they were teaching was riddled with holes and not necessarily true. And the most gauling part, in addition to worrying about wasting two years of my life there, was that one had to regurgitate this crap to receive a passing grade. And Janet Yellen, whom history has shown was wrong on several occasions, was one of my profs. Economics is not science. Prior to the adoption of the scientific method, it was quite common for intellectuals to hatch theories to explain natural phenomena. Vapors and humors were posited to describe the causes of certain diseases, for example. Proof, forget about it. Sounds good, and I am making a name for myself. That is economics today.

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3   HEY YOU   2015 Mar 16, 2:39pm  

Economist are full of garbage & never take it out.
We be loving our virtual & physical fiat & the paper is really good quality.

4   Bellingham Bill   2015 Mar 16, 4:49pm  

Where economics fails I guess (going by Steve Keen) is an under-appreciation of the time dimension.

"It is difficult to get a man to understand something when his salary depends upon his not understanding it."

5   Y   2015 Mar 16, 5:16pm  

MBA??
And this??
I don't think so....

Blurtman says

And the most gauling part

6   indigenous   2015 Mar 16, 6:21pm  

SoftShell says

MBA??

And this??

I don't think so....

His degree was not in spelling...

BTW the problem with economics is that you cannot apply science to a soft science like you would cosmology, metallurgy, etc

The second and bigger problem is that a LOT of people make their living off of a charade called the government controls the economy. And this charade has brainwashed all of those in whoville, many on Patnet.

7   Shaman   2015 Mar 16, 6:53pm  

The bolt was cross threaded, galling the threads badly.
Her insult was galling to me.
The French people are extremely Gauling.
Heh

8   Vicente   2015 Mar 16, 6:59pm  

Remind me when MUSH admitted any mistakes.

Just one instance.

Coginitive Disonnance definition: See Mike Shedlock.

9   Ceffer   2015 Mar 16, 8:21pm  

The theories WOULD work, if only people weren't so damned contrary and so damned unpredictable.

10   turtledove   2015 Mar 16, 11:05pm  

"The theories WOULD work if only people weren't so damned contrary and so damned unpredictable."

Is that sort of like:

The theories WOULD work if they actually worked?

11   Ceffer   2015 Mar 16, 11:51pm  

Hmm, you caught that.

A lousy defense is better than no defense at all? Or it shows that the economic masters of the universe just won't admit they don't know jack when it really comes down to it?

With human beings, having a guy with glasses and a beard that looks smart and is full of bullshit is better than a void (in a witch doctor sort of way). Some people are reassured by that sort of thing and it provides good jobs to guys with glasses and beards that look smart and are full of bullshit.

12   Vicente   2015 Mar 17, 12:15am  

Ceffer says

provides good jobs to guys with glasses and beards that look smart and are full of bullshit.

I have never seen Larry Summers with a beard.

13   finehoe   2015 Mar 17, 6:16am  

[quote]Didn’t policymakers get it all wrong? Haven’t the academic economists been squabbling nonstop?

Well, as a card-carrying economist I disavow any responsibility for Rick Santelli and Larry Kudlow; I similarly declare that Paul Ryan and Olli Rehn aren’t my fault. As for the economists’ disputes, well, let me get to that in a bit.

I stand by my claim, however. The basic macroeconomic framework that we all should have turned to, the framework that is still there in most textbooks, performed spectacularly well: it made strong predictions that people who didn’t know that framework found completely implausible, and those predictions were vindicated. And the framework in question – basically John Hicks’s interpretation of John Maynard Keynes – was very much the natural way to think about the issues facing advanced countries after 2008. The sad thing, of course, is that this incredibly successful analysis didn’t have much favorable impact on actual policy. Mainly that’s because the Very Serious People are too serious to play around with little models; they prefer to rely on their sense of what markets demand, which they continue to consider infallible despite having been wrong about everything. But it also didn’t help that so many economists also rejected what should have been obvious.

Why? Many never learned simple macro models – if it doesn’t involve microfoundations and rational expectations, preferably with difficult math, it must be nonsense. (Curiously, economists in that camp have also proved extremely prone to basic errors of logic, probably because they have never learned to work through simple stories.) Others, for what looks like political reasons, seemed determined to come up with some reason, any reason, to be against expansionary monetary and fiscal policy.

But that’s their problem. From where I sit, the past six years have been hugely reassuring from an intellectual point of view. The basic model works; we really do know what we’re talking about. [/quote]

http://krugman.blogs.nytimes.com/2015/03/14/john-and-maynards-excellent-adventure

14   mell   2015 Mar 17, 7:21am  

finehoe says

From where I sit, the past six years have been hugely reassuring from an intellectual point of view

Yeah, reassuring in widening the wealth gap. Citing Krugman's drivel in the face of Japan continuously going down the shitter from what was once a great nation - literally bankrupted by the Krugsheister's "advice" - is entertaining. The basic macroeconomic framework to turn to wrt money policy is that of Germany (before the Euro), Switzerland, or Singapore. In generally Asia's strong currencies will eventually take over, possibly joined by the rupee. The West will continue its decline if it doesn't return to sound money policies, but resistance to the QE-clown-brigade has been increasing.

15   Blurtman   2015 Mar 17, 8:50am  

I think the failure of economics is due not only to bogus theories, but also explained by the practice of conformity for career advancement. Even at the masters level, my classmates were less concerned with what was true than what was the expected answer. And pre-med students are the extreme example of this. And so what school may reward is the regurgitation of what the professor says is true. As economic pressure increases, rocking the boat may become less appealing, and regurgitation more practiced. At the national level, politicians aren't concerned with what is correct, but what feathers their bed. So witchcraft "science" plus politics equals where we are now.

16   indigenous   2015 Mar 17, 9:10am  

finehoe says

From where I sit, the past six years have been hugely reassuring from an intellectual point of view.

Good Gawd what a fucking mutt. Economics are not a math problem, the results of a theory should be in the same zipcode as logical reality, the past 6 years are proof that everything Krugman espouses is dead wrong.

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